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4/4/2013
02:43 PM
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Why Tech Projects Fail: 5 Unspoken Reasons

Today's IT groups make too many ROI guesstimates and have too little accountability, says this financial industry IT exec, in his debut column for InformationWeek.

Depending on which consultancy you ask and what they're ultimately trying to sell you, the failure rate for technology projects is anywhere from 37% to 75%. I especially like the 37% -- not 35, but 37 -- because those extra 2 percentage points give the kind of false precision that suggests authenticity.

If managing technology pays your mortgage, you usually explain away those failures by pointing to your gray world: gray requirements, gray resources, gray planning, gray risks. The only vibrant color in your life is the brilliant hue of overly optimistic project scheduling.

But that's not the whole story. Here are five unspoken reasons IT projects fail as often as they do, drawn from my two decades as an IT manager and executive in the financial services industry.

1. Technology ROI numbers are mostly fiction. The most complex variable in the ROI equation -- one that's usually ignored -- is the cost of the business re-architecture required to consume a proposed technology. If you take away nothing else from this article, know that technology demands business transformation, and that's usually the largest hidden cost.

The rule of thumb for calculating the risk of rolling out new technology is this: the higher the buy-or-build price, the larger and more expensive the required redesign of your business processes.

[ To launch any successful IT program, you must dispense with distraction. Read more at 8 Reasons Enterprise Architecture Programs Fail. ]

Rethinking your processes is just one disruptive element. Think about all the non-tool-based training your company needs to do before introducing a new tool, and think about all the cultural changes it needs to make to pave the way for new technology adoption.

As soon as you bring culture into the equation, determining the potential cost of an IT engagement becomes exponentially more difficult. ROI analysis will necessarily enter gray country, leaving the comforts of hard science and treading into the imprecision of social science.

It's not impossible to get the calculation right (or close), but here's the kicker: No matter how solid or technically sophisticated an ROI analysis may be…

2. ROI rarely drives the technology investment decision. In most companies, determining the potential costs and benefits of a tech investment is neither art nor science. Rather, it's an elaborate and often dishonest marketing exercise (upward and outward-facing) aimed at persuading senior stakeholders that one HIPPO should win out.

Having worked for both tiny startups and massive multinationals, I've learned that the larger the company, the greater the chance that what drives tech investments isn't what's best for the business, but what's best for the decision-maker's career. And in large companies, those two factors rarely align.

At my previous employer, a large financial institution that has gone belly up, I attended a great many senior management off-sites. One particular exchange with a senior exec has haunted me for more than a decade. During a breakout session, a midlevel manager asked what he should do if he were competing with his internal peers for funding when he knew that their functions and ideas were more important to the bank. The answer from the senior exec: Treat your role as the most important and do everything you can to win that funding fight. In other words, putting yourself first is in the best interests of the company.

The unintended consequence of this kind of thinking was the financial community's spectacular collapse. The unintended consequence in IT -- and this isn't unique to my former employer -- is that project funding more often goes to mildly technical marketers and shameless salespeople, not to hardcore engineers and scientists who let the data drive.

Rare is the executive who puts the company's interests before his or her own (financial stability, career progression, personal brand building). And that kind of behavior isn't exclusive to executives; it's pervasive from the boardroom to the mailroom.

That's not the only unlearned lesson of the banking crisis of 2008….

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3. There's rarely any long-term accountability in technology. Multi-year projects are repeatedly green-lit with an implicit understanding that most of the current decision-makers will have moved on or up by the time the project is set to deliver.

The handover of the project's reins to the next-level-downs actually helps the brand of the people moving up. Project failure can conveniently get recast as a failure of execution by the original decision-makers, most of whom are now more senior and no longer directly responsible. If only they hadn't answered management's higher calling. This phenomenon, the dynamic behind "failing up," is endemic to all corporate life, not just technology.

It sounds insidious (and it is), but what's driving the cycle is pretty human. Most people want to see career progression with or without the requisite blood, sweat and tears. In technology, where product lifecycles are usually three to five years max, staying in the same job for more than two or three years signals a lack of drive, ambition, skills.

The message: Change jobs or be considered irrelevant. Upgrade or be upgraded. So there's a structural incentive for career mobility. Long-term projects are consequently damned if you move and damned if you don't.

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Uladzislau Shauchenka
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Uladzislau Shauchenka,
User Rank: Apprentice
8/19/2013 | 12:29:00 AM
re: Why Tech Projects Fail: 5 Unspoken Reasons
Can I recommend a resource?
Why Projects Fail is a 113 pages book featuring project management case studies, analyze of failed projects, suggestions and recommendations.
mracz303
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mracz303,
User Rank: Apprentice
8/14/2013 | 7:57:33 PM
re: Why Tech Projects Fail: 5 Unspoken Reasons
Most projects fail due to the lack of the fundamentals. I am old school, I like to understand if the data that i am working with and making my decisions on is valid and accurate. In any busniess case or project start up, question the data presented to you and ask, when was the data updated, by who, what procedures did they use to validate the accuracy of the data and how.
When is the last time you heard inventory, validation, accuracy or the integrety of the data being questioned? I assume not very often. The a high failure rate is due mostly to all of the above point of pain plus poor judgement in regards to the dat used to support the project.
I do understand application projects are of a different bread then IT hardware, but surely if you are basing your project milestones on bad data, you will fail more often then not, on any project.
khizar_07
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khizar_07,
User Rank: Apprentice
7/12/2013 | 10:19:14 AM
re: Why Tech Projects Fail: 5 Unspoken Reasons
The reason the projects fail is the the IT outsources overstate their technical know how and the performance of the hardware they are trying to sell. In the end the project does not scale well to beyond a few hundred thousand users and furthermore functionality that was promised is missing because incompetent programmers do not know how to think outside the box.
The whole industry is in disarray with many recent projects only being awarded on a pay for performance basis. If it works they get paid if not then its a loss for the IT outsourcing companies.
If you want a record store that can store and retrieve a few details and does not need to scale past a few hundred thousand users then the IT outsourcers are capable of delivering that.
If you need to have a system capable of supporting millions of users whilst also doing complex logic/calculations and routing messages to different users and computer systems then you have to look elsewhere.
You know the IT Outsoucers are incompetent when they throw around buzzwords such as Big Data! If they knew anything about IT they would understand that technology for search engines is inappropriate for structured databases. Altering a customer record to store an additional filed becomes extremely difficult.
Mark Simchock
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Mark Simchock,
User Rank: Apprentice
5/10/2013 | 11:23:03 AM
re: Why Tech Projects Fail: 5 Unspoken Reasons
Interesting. The majority of these have little if anything to do with technology. Seems to me that IT is again getting blamed for things that are not exclusive to IT, nor are they within the control of IT. Perhaps a better title would have been "5 Unspoken Ways Leadership, Management & Culture Fail IT Projects"?
RunningQuery
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RunningQuery,
User Rank: Apprentice
5/2/2013 | 12:52:21 PM
re: Why Tech Projects Fail: 5 Unspoken Reasons
If something can't be done manually why would anyone surmise that automating it will help? Technology can do wonderful things, but it can't magically fix a business. However, it is exciting to spend a bunch of money trying ... you are right Coverlet it is a cultural issue.
UltraShip Tms
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UltraShip Tms,
User Rank: Apprentice
4/29/2013 | 3:41:15 PM
re: Why Tech Projects Fail: 5 Unspoken Reasons
From our perspective, the challenges you speak of could all be mitigated if organizations spent a little more time doing due diligence in the selection of a provider/partner of enterprise software. WE categorically preempt these stumbling blocks when selling and then implementing our Transportation Management System (TMS) solution for Fortune 500 companies. Want to know how? We blogged a rebuttal to these five points at our Supply Chain Collaborator blog here: http://bit.ly/10OxtkV Would love your feedback. Thanks Coverlet!
MedicalQuack
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MedicalQuack,
User Rank: Moderator
4/13/2013 | 4:37:31 PM
re: Why Tech Projects Fail: 5 Unspoken Reasons
Ok a little satire here, why do banks always win with their math and formulas, it's this PLOS one study...the fear of math generates real physical pain with consumers...It is an advantage built in, preset for Wall Street:)

http://ducknetweb.blogspot.com...

Now to go a little further and this is important to science as well with "P" values with models and math, we now have a publication that advises how to recognize if someone has "fiddled" with the P Values...we have that financial models..just one more non linear game if you will

http://ducknetweb.blogspot.com...

Again I used to be a developer and integrated some different softwares with medical records and medical billing and even though I am not a quant and being the next level down, a smart programmer can still see and determine were dirty code has been written for profit in just how it executes without having source code.

The Quants documentary is great as it is the only video that I have seen out there that actually helps educate the layman on what quants do and how it works. I have had it on my blog for over a year and keep recycling it as it had about 3000 views when I started and now over 500,000 have watched it. It's the only documentary to where you see a quant at the blackboard and this gives the layman some visual of how this occurs. Wilmott and Derman are great with their explanations. Want to fight crime and fraud, it's all in the models.
Coverlet
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Coverlet,
User Rank: Strategist
4/11/2013 | 4:54:55 PM
re: Why Tech Projects Fail: 5 Unspoken Reasons
Steve-

You had me at "oozing."

I'm not sure whether its "the beasts of the industry" that cause the problems or whether it's their size (and ours) that causes them (us) to unwittingly add to the problem. It's never just about someone doing something to IT. There's some delicious complicity there.

CM
Steve Christensen
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Steve Christensen,
User Rank: Apprentice
4/11/2013 | 2:09:57 PM
re: Why Tech Projects Fail: 5 Unspoken Reasons
Coverlet Meshing,

Every point you've made is spot on. Can you imagine starting your car, driving to work and only getting there 25-63% of the time? Again, that 2% makes the numbers relevant. My perspective on enterprise technology is that the beasts of the industry: SAP, Oracle, etc. inadvertently cause the problems you've defined.

These systems are complex, massive, expensive, disruptive and tend to totally ignore those parts of the business that make your company unique. The vendors then come in and talk about best of breed and best practices: none of which actually exist. Those two phrases are 100% marketing blather intended to shut you up about your needs because, even though their system doesn't fit your business, your business is obviously out of step with the 'leaders' of the world.

No company starts out to be like its competitors. Every company is trying to bash in the head of their competitors and they don't do it by sinking 5.5% of revenue to acquire an ERP and then 4 - 6% of revenue every year thereafter just to feed and care for the beast. 70% of the workforce of a company derive very little, if any, benefit from the ERP. Instead all the benefits and political capital accrue to the HIPPO that won't be around long enough to see all the carnage.

To avoid technology failure the first step is to take the ERP off the altar and put it into the foundation of the business where it belongs. Freezing its ability, restricting modifications, ignoring upgrades and avoiding like the plague 'integration' is the only way to mitigate risk, budget and resource constraints. To your point about HIPPO's and their ability to move on...you can't move on until the project you sponsored is done.

Now that you've sealed off the oozing source of problems (ERP), use new enterprise technology that does not interfere or require any change to the underlying systems. This technology then must be self contained with sufficient UI, full Logic, infinite Data and fall off a log simple processes that make user adoption instantaneous. My company has been delivering these solutions for 5 years. Projects take less than 30 days. ROI is immediate and the payback is in month 1 or 2 at the latest. User adoption is voracious, training is virtually eliminated and accountability is enforced.
Coverlet
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Coverlet,
User Rank: Strategist
4/11/2013 | 12:25:17 AM
re: Why Tech Projects Fail: 5 Unspoken Reasons
Richard-

First, my disclaimer-- which should be published with every column that I write and email that I send: "You're probably smarter than me on most issues and you're definitely more knowledgeable than me on any topic where *you* pose a question. That's not humility speaking. That's an understanding of the law of averages and how it relates to people who 1) read and 2) are engaged enough by that reading to ask questions of the author."

That said....

1) I've found that we chase methodologies-- whether for program management or development-- for all the wrong reasons. It's not waterfall or agile, for instance, that delivers speed to market engineering or reduces inefficiencies or provides better quality. It's culture. Everyone's excited about Agile right now but I know of waterfall shops with soul-- ones that have the right culture and frankly will blow away the more mechanistic, soulless agile shops on any measure. So Agile (or insert any methodology here) isn't a cure-all, its a fad. Culture counts.

2) If you're in a large enough company, there's no *one* methodology that can address the entire array of project planning maturity levels in that org. I always think of that reality show with the family that has 19 kids: the oldest one is 20 years old and the youngest 3 months. That's your modern enterprise. And no monolithic program mgmt methodology or system or tool will offer the kind of differentiated experience that's right for all of those maturity level. As with architecture, we need multiple patterns when approaching project management. And each pattern should take into consideration the maturity of the PM competency of its intended audience.

Given my disclaimer, I'd love to hear what you think is the answer to your question. :)

CM
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